Cement cos fined for forming cartel

KARACHI (Reuters) - Competition authorities have slapped a fine of about $77 million on 20 cement companies found guilty of operating as a cartel and raising prices under mutual agreement, official documents show. A copy of the judgement given by the Competition Commission of Pakistan (CCP) and posted on its website (www.mca.gov.pk) said each company has been asked to pay penalties equivalent to 7.5 percent of their last annual turnover, which amounts to 6.352 billion rupees. The companies penalised include leading players Lucky Cement, D.G. Khan Cement, Fauji Cement and Maple Leaf Cement, but the ruling has not had a major impact on cement stocks. While the likely financial benefit derived from this infringement is difficult to estimate, it is likely to have contributed substantially to the profitability (of the companies), the judgement said. In any event, it is evident that the consumers surplus was converted into producers surplus for more than a decade. A spokesman for the All Pakistan Cement Manufacturers Association was not available for comment, but analysts and an industry official said there would probably be a long legal battle before the fine could be recovered. We already have a case pending in the Lahore High Court and till its decision the authority cannot recover any penalty from us, said the industry official. Even after that, we do have the option of going to the Supreme Court, he said.